How CIOs Can Achieve Digital Business Transformation in Healthcare

May 20, 2019

Contributor: Gloria Omale

True digital business transformation in healthcare requires business model change.

In most scenarios, digital business transformation in healthcare usually starts with a CIO being tasked with developing a business case for digital care delivery. This could take the form of, for example, creating a new value proposition focused on remote patient monitoring for chronic disease management and on-demand virtual consultations.

A new virtual service like this requires making changes to the business and operating models. That’s because a new virtual service may increase the demand on other clinical service lines and will involve renegotiating contracts with payers. These changes cause a ripple effect, which creates dependencies and requires adjustments to the business design.

“ CIOs must ensure that the digital strategy includes the successful transformation of business models and clinical operations”

“Healthcare CIOs have a very important role to play in digital business transformation and can help healthcare delivery organizations identify dependencies and implement relevant changes to the strategy,” says Mike Jones, VP Analyst, Gartner. “To successfully plan and execute a digital business strategy, the healthcare CIO must ensure that the path to digital transformation is clearly articulated and understood by all stakeholders.”

Read more: How Healthcare Providers Can Succeed in Digital Transformation

The path to digital healthcare

There are two paths to digital business in healthcare: the vertical and the horizontal. The vertical path involves the digitalization of the business of healthcare management, where the CIO deals with the administrative and financial aspects of care (for example, accounting and arranging for care) and supply chain.

The horizontal path encompasses the digitalization of clinical capabilities. It lies at the heart of an organization’s value proposition, and forms the basis of the business model. Digital business occurs when these two paths come together to create value at the intersection of e-commerce and digital care delivery.

Digital care delivery — the use of technologies to promote, maintain and restore the health of an individual through high-quality, anywhere-anytime care — represents the future state in healthcare. “CIOs need to illuminate its value because providing care is at the core of a healthcare organization’s business model and is what patients, citizens and consumers receive,” says Jones. “But first, CIOs must ensure that the digital strategy includes the successful transformation of business models and clinical operations.”

Relationship between business strategy and business and operating models

There’s a reciprocal relationship between a healthcare organization’s business strategy and its business model, and changes to one affect the other. And this will usually also lead to changes in the operating model.

“To successfully align the three, CIOs will need to help their healthcare delivery organizations bring the digital and business worlds together by contributing to business model innovation, business strategy development and operating model improvement,” says Jones.

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